SCHEDULE: Empery Asset Management Takes Significant Stake in Volcon, Appointing New Co-CEO and Board Chairman

Empery Asset Management and its principals have acquired a 5.83% stake in Volcon, Inc. through a $26 million private placement, leading to the appointment of Ryan M. Lane as Co-Chief Executive Officer and Chairman of the Board, alongside other key management changes.

Summary

• Empery Asset Management, LP, Ryan M. Lane, and Martin D. Hoe (Reporting Persons) have acquired a significant stake in Volcon, Inc.
• Ryan M. Lane beneficially owns 2,626,594 shares, representing 5.83% of the outstanding common stock.
• Empery Asset Management, LP and Martin D. Hoe each beneficially own 2,526,594 shares, representing 5.61% of the outstanding common stock.
• The acquisition was primarily through a $25,000,000 private placement where Empery Purchasers bought 2,500,000 shares at $10.00 per share.
• Mr. Lane personally invested an additional $1,000,000 for 100,000 shares in the private placement.
• The total cost of shares acquired by Empery Funds was approximately $25,379,000, and by Mr. Lane was approximately $1,000,000.
• The private placements closed on July 21, 2025.
• In connection with the investment, Ryan M. Lane was appointed Co-Chief Executive Officer and Chairman of the Board.
• Timothy Silver was appointed Chief Operating Officer, and Brett Director was appointed Vice President of Legal.
• Mr. Lane was granted stock options for 1,792,812 shares at an exercise price of $10.00 per share, vesting based on VWAP milestones, with full vesting at $30.00 VWAP.
• Messrs. Silver and Director also received stock options for 597,604 and 298,802 shares, respectively.
• Messrs. Lane, Silver, and Director entered into a 90-day lock-up agreement for their shares.
• The Reporting Persons intend to actively review their investment and engage with management and the Board regarding business, operations, governance, strategy, and future plans.

Sentiment

Score: 7

Explanation: The filing indicates a significant strategic investment and a major overhaul of management, including the appointment of a new Co-CEO and Chairman from the investing entity. This suggests a strong belief in the company's future and a commitment to driving value, despite the dilutive nature of the capital raise and the premium paid relative to recent trading prices. The performance-based options for new management are a positive alignment. However, the high exercise prices of older warrants and the recent low trading prices (pre-split) indicate past challenges.

Positives

• Significant capital infusion of $26,000,000 into Volcon, Inc. through a private placement.
• Appointment of experienced individuals from Empery Asset Management to key leadership roles (Co-CEO, Chairman of the Board, COO, VP of Legal) suggests a strategic commitment and potential for improved governance and operational efficiency.
• New management's stock options are tied to performance milestones, including a $30.00 VWAP target, aligning their interests with shareholder value creation.
• The 90-day lock-up agreement for key new management and investors demonstrates commitment and stability.
• The Reporting Persons' stated intent to actively engage with management and the Board on strategic matters could lead to positive operational and governance improvements.

Negatives

• The private placement involved the issuance of 2,500,000 new shares, which could result in dilution for existing shareholders.
• The exercise price of the new options ($10.00) and the private placement price ($10.00) are significantly higher than recent open market trading prices (e.g., $0.56-$0.69 pre-reverse split, which would be $4.48-$5.52 post-split), implying a substantial premium paid in the private placement relative to recent market prices.
• The filing mentions previous warrant holdings with very high exercise prices ($1856 and $16.00), which are currently not exercisable due to beneficial ownership blockers, indicating past capital raises at much higher valuations that may not have materialized.

Risks

• The beneficial ownership blocker on existing warrants (4.99%) prevents immediate exercise, limiting the flexibility of the Reporting Persons to increase their stake through these instruments without further action.
• The success of the new management team and their ability to achieve the stock price milestones ($30.00 VWAP for full option vesting) is uncertain and depends on future company performance.
• The Reporting Persons may in the future purchase or sell additional shares, or engage in hedging, which could impact stock price volatility.

Future Outlook

The Reporting Persons intend to continuously review their investment in Volcon, Inc. and may engage in discussions with the company's management, Board, other shareholders, industry analysts, and potential strategic partners. These discussions could cover various aspects including business operations, corporate governance, strategic direction, capitalization, ownership, and future plans. Depending on market conditions and company performance, they may consider purchasing additional shares or other securities, selling existing holdings, or engaging in hedging transactions.

Management Comments

• The Board of Directors elected Mr. Lane to serve on the Board, as Chairman, and Co-Chief Executive Officer.
• The Board appointed Timothy Silver as Chief Operating Officer and Brett Director as Vice President of Legal.

Industry Context

Volcon, Inc. is an electric powersports company. The significant investment and management overhaul by an asset management firm suggest a potential turnaround or strategic shift, common in companies seeking to capitalize on growth opportunities or address operational challenges within the evolving EV/powersports sector. This could indicate a belief in the long-term potential of the company despite recent stock performance.

Comparison to Industry Standards

• The private placement price of $10.00 per share is a substantial premium compared to the recent trading prices of $0.56-$0.69 (pre-reverse split, equivalent to $4.48-$5.52 post-split), which is unusual for a private placement unless there's a significant strategic component or a belief in a rapid turnaround. This contrasts with typical private placements that often occur at a discount or slight premium to market.
• The vesting schedule for Mr. Lane's stock options, tied to a VWAP of $30.00, sets an aggressive performance target, indicating a high expectation for future share price appreciation, which is a strong incentive alignment mechanism.
• The 4.99% beneficial ownership blocker on existing warrants is a common anti-dilution and regulatory compliance measure, ensuring the holder does not exceed certain ownership thresholds without triggering additional reporting requirements.

Management Changes

Corporate Governance

Related Party Transactions

• The private placement involved Empery Funds, Mr. Lane, and certain employees of the Investment Manager (Empery Purchasers) purchasing shares from Volcon, Inc.
• Mr. Lane, a Managing Member of Empery AM GP, LLC (general partner of Empery Asset Management, LP), directly purchased shares and was appointed Co-CEO and Chairman of the Board.
• Timothy Silver, Portfolio Manager at Empery Asset Management, and Brett Director, General Counsel and Chief Compliance Officer of Empery Asset Management, also purchased shares and were appointed COO and VP of Legal, respectively.
• Mr. Lane entered into an employment agreement with the Issuer and was granted stock options.
• Messrs. Lane, Silver, and Director entered into a Lock-Up Agreement with the Issuer.

Stakeholder Impact

• Shareholders: Potential dilution from new share issuance, but also potential for increased share value due to capital infusion, strategic direction, and new management expertise. The 90-day lock-up provides short-term stability.
• Management/Employees: Significant changes in leadership roles, with new executives from the investing entity. New performance-based incentives for key management.
• Creditors: Capital raise could improve the company's financial position, potentially reducing credit risk.

Next Steps

• Filing of a registration statement with the SEC no later than August 16, 2025, for the resale of shares from the Cash Private Placement.
• Stockholder approval for the stock plan under which Mr. Lane's options were granted.
• Reporting Persons will continue to review their investment and may engage in further discussions with management, the Board, and other stakeholders regarding the company's strategic direction and operations.
• Potential future actions by Reporting Persons include purchasing or selling additional securities or engaging in hedging transactions.

Key Dates

Recommendation

The significant strategic investment of $26 million at a substantial premium to recent trading prices, coupled with the appointment of key personnel from the investing entity (Empery Asset Management) to Co-CEO, Chairman, COO, and VP of Legal roles, signals a strong vote of confidence and a clear intent to drive a turnaround or accelerate growth. The performance-based stock options for new management, particularly the $30.00 VWAP target, align their interests directly with long-term shareholder value creation. While there's short-term dilution, the capital infusion and strategic leadership changes are highly positive catalysts that could fundamentally re-rate the stock. This looks like a strategic play by a sophisticated investor to unlock significant value.

Keywords

Volcon Inc., Empery Asset Management, Private Placement, Schedule 13D, Common Stock, Equity Investment, Corporate Governance, Management Change, CEO Appointment, Board Chairman, Stock Options, Lock-Up Agreement, Registration Rights, Shareholder Activism, Capital Raise